Marketing Advice for Start-ups: Know your customer first

An e-commerce start-up asked for my thoughts on how the company should be thinking about marketing and what could be done with almost no marketing budget to drive acquisition and purchasing activity. I had to chuckle when I was asked for this input for yet again it demonstrates where in the priority list most business people perceive marketing to be….at the bottom. Most start-ups build a product, get it up and running and have a rough idea of how it will generate money. Unfortunately, most business leaders look to marketing as the tool to help grow the business…after the product is launched.

4PsGraphicI am using the term “marketing” very loosely here. Marketing is mostly understood as all the tangibles – online, website SEO, paid search, social media, etc. Little regard is given to the core marketing principals of the 4 Ps, for example. When most people hear the words “the 4Ps” they think about the OPP song from the mid 80s and NOT the critical marketing concepts of Product, Price, Place, Promotion. Clearly most people get stuck on the Promotion part….which is putting the cart before the horse.

I encourage all start-ups who approach me for marketing help to stop, take a deep breath and evaluate their business and product through the lens of the 4 Ps within the context of a few additional guiding principals; defining the target customer segment (s), understanding why the customer segment wants to buy the product and defining how the customer evaluates/buys the product.   Now to the start up leadership who feels time pressed, this sounds like a lot of work to do for marketing.

Working through this process and understanding the customer is CRITICAL to the success of the business. Leaders may find their product does not meet the right customer need or that a different customer segment should be targeted. This can be a tough nut to swallow for it means reworking the product that was just launched. Start up leadership must get these marketing concepts right before any marketing plans or programs can be developed and launched with a successful outcome.

One of my mentors and managers at eBay developed a structured document called a Unified Marketing Brief that helps guide business units and companies through this form of critical thinking. The document requires debate and thinkin around target audience (segmentation), marketing objectives, key success metrics, competitive industry analysis and market research. Once these elements are addressed, discussion is encouraged around brand and how to position and message the product and key benefits. I’ve guided business units in the e-commerce, identity protection and financial technology verticals through this process with very successful outcomes. Yes, it’s a lot of work and it takes time. However, once completed, business leaders now have a road map to guide marketing planning and tactical program development.

Buying Cycle GraphicI found another great example of a structured approach to startup marketing by April Dunford on Rocket Watcher . She provides a great approach to mapping marketing tactics to the buying process of each target segment.

April also takes the concept one step further by discussing the importance of testing, improving and understanding the root cause of the tactical failure. Too often companies don’t get the immediate tactical response rates desired and make the wrong assumptions as to why it happened. Unfortunately these wrong assumptions follow to the next tactical program…that has the same poor results. April makes a great point in encouraging marketers to understand the WHY to improve tactics. Check out April’s recent presentation to learn more at:

Now let’s assume that most of this strategic marketing work is in process and marketing tactics are launched. Is the marketer’s job done? Obviously no. The work has moved into a different phase of continuous improvement based on customer feedback. Start-ups must have a mechanism in place to capture and listen carefully to customer feedback. The mechanisms can be customer support teams accessible by email or online chat, twitter feeds or by call centers.

Listening to customer feedback is critical…but converting the feedback into actionable product improvements is another. This is a topic for another post! Does your start up have these mechanisms in place? I bet your competition does.

 

 


Now hear me out,the Apple/IBM partnership is BIG for mobile payments

Apple IBM PartnershipI have worn many hats working in the financial technology vertical including business development, product, marketing and partnership development. In fact, I managed the IBM partnership for a PFM technology provider I joined in 2010. IBM played an important role for the PFM technology provider for it opened access to many of the financial institutions that run on the IBM technology to support core, online and mobile banking systems. Specifically, the PFM solution ran on IBM’s Websphere mobile software and on the IBM DB2 data base software. The software compatibility proved to be a strong selling point during business development discussions with banks that ran core legacy banking systems on Big Blue.

I learned fairly quickly that one of the biggest objections from mid-tier and larger banking executives was, “love your technology….but it MUST run on our legacy core and online banking systems.” Fortunately for us, we overcame this objection by playing the “we run on IBM” card to continue conversations. Unfortunately for IBM, these legacy limitations prevent many financial institutions from launching new tools and features that help consumers access their money through a mobile device. As we fintechers all know, these mid-tier and large banks are losing customers to the more sophisticated, innovative and mobile centric financial institutions…like Moven, Simple or GoBank.  An April 2013 Forrester study found that nearly 50% of respondents said they would be willing to switch to a bank with a better mobile experience.

The recently announced partnership between Apple and IBM could fix this and will position both companies very well for continued growth in the mobile banking and payments verticals..even with Millennials. I know, this is shocking …but in the words of Kevin Nealon, “now hear me out.”

As part of this partnership, IBM will be launching roughly 100 native mobile apps developed specifically for iOS. These apps are part of the MobileFirst platform IBM launched earlier this year and will adhere to the security, backup and data movement capabilities IBM is known for across the high technology industry. These capabilities are what keep banking IT executives coming back to Big Blue and a few of these iOS apps will strategically address the specific needs of the banking vertical.

The collaboration between IBM and Apple to build these apps will allow legacy systems written in Assembler or COBOL to run on the iPhones and iPads. Penny Crosmen at American Banker states, “Making existing mainframe applications usable on iPads could help banks bring mobility to old technology.”  This is HUGE for it helps banks easily engage with customers within the branch, through merchants or at home through a mobile device without having to make heavy investments in new technology or go through the lengthy process of selecting a clunky third party provider. For example, a bank will no longer need to license mobile platform technology from a Kony or mFoundry for their IBM partnership will open up mobile functionality through iOS sitting on top of legacy software. This is cool for the banks…but SCARY for mobile platform providers.

Screen Shot 2014-07-27 at 5.27.27 PM

The biggest use cases for the IBM/Apple mobile technology marriage can be seen at the branch and merchant levels. I can easily envision a wealth management representative having an in-branch investment conversation with a client using an iPad. The representative easily accesses a client’s core banking information from the mobile device and displays current balances, checking account activity and recommended investment opportunities right on the tablet. Taking this one step closer to the consumer, I envision the consumer later that evening going back to the banking application and sharing the investment recommendations with his/her spouse. Together the couple reviews the recommended investments, discusses financial goals and asks for further detail from their adviser directly from the iOS application.  Tadaaaaaah! The mobile/table user experience is helping the bank build deeper customer relationships through helping consumers manage their money…leveraging a channel the consumer prefers.

The second benefit of this marriage comes at the business banking level. This relationship should make payment providers pause…and maybe even shit.  Imagine a small retail merchant opens a business banking account that includes the “rental” of a payments tool like a card reader. The Apple/IBM relationship enables the bank to provide payments tools, card processors, etc. through already widely adopted iOS products. The bank may even function as a third party retailer for the iOS hardware and will save money by phasing out those clunky counter top card processors.  Banks will take away a key competitive advantages from payment providers who boast about the ease of use and mobility of collecting payments. Additional benefits for the bank are the ability for business bankers to track small business activity and recommend lower cost banking products, loan savings opportunities based on the specific business activity and transactions. Banks can also FINALLY find the right channel to provide those ever so sought after (and never well executed) locally targeted special offers and discounts to consumers.

For those of you keeping score at home, the consumer will also benefit from the IBM/Apple partnership. The iOS loving consumer will now be part of the same payment ecosystem merchants have with their banks. The iOS system now includes Passbook and it is no far leap to envision this evolving into a wallet that holds bank provided payment cards. This is “duh” obvious. Given that merchants, banks and consumers are all part of the same iOs payment system, consumers can easily continue using their long held VISA and Mastercards on their mobile device.  Continued adoption of the same payment ecosystem may provide opportunities for lower processing fees for all involved. Unfortunately, at this point the mobile payment providers are now banking on lower fees as their main value proposition. However, if banks are able to provide an easily adopted mobile wallet with many iOS supported merchants accepting these payments, even lower fees may be a moot point. Consumers will be able to FINALLY use their mobile wallets at the merchants and service providers they have always used.

Wow, way to go Apple.  You created a true mobile wallet.


Bitcoin self regulation required to increase adoption

Screen Shot 2014-07-07 at 10.09.44 AMI remember debating the benefits and dangers of the Euro during a Macro Econ class just as the currency was being rolled out. One of the benefits of the Euro is the ability for consumers to pay for goods and services with one common currency significantly reducing costly currency exchange fees. Clearly if you are a citizen of a less economically powerful country, like Greece for example, the Euro is a big boon. All of a sudden your previously lower valued currency is a moot point and you know have equal buying power as someone from a strong country such as Germany. However, there in lies one of the biggest problems with the Euro. Countries of lower economic strength are now at currency parity with stronger countries….at the expense of the most economically strong.Yes, I understand I’m simplifying the issue, but therein lies a real economic problem.

The European Central Bank is very busy managing the EU banking system, stabilizing currency value and convincing the English and German bankers to have faith in the Euro. After all, it is their currency reserves that back the value of the Euro. This is no easy task when England and Germany have been asked to fund monetary policy, such as bank bailouts, to prevent the collapse of the system. Faith in the Euro is what is keeping the system afloat. Faith in the currency and system is what stops England and Germany from pushing for stricter regulations to protect the value of their native currencies and their ability to trade.

Bitcoin

Faith plays a strong role in any currency. The faith is in the government issuing the currency to back up the value with sound monetary policy, a centralized bank, and financial assets. However, I think FAITH plays an even BIGGER role in the latest currency innovation, Bitcoin. Bitcoin is known as a “cryptocurrency” and its origins are mysterious. So mysterious, no one really knows who created the currency.  Not even Jack Bauer can uncover his identity.

Bitcoin is not backed by any bank, can be used to buy/sell merchandise or services, and can be used to transact anonymously. Wait, what? Without the banking system, how can this currency be valued? Bitcoins are bought and sold on an exchange…and forces of supply and demand move the currency value up and down. To further complicate the value, Bitcoins can also be  “mined” through solving complex mathematical equations using certain software programs. I can’t help think that Bitcoin is very similar to how gold nuggets were mined and valued during the California Gold Rush. The big difference, though, is that gold is a precious metal, is tangible and has had value for thousands of years. Bitcoin “gold nuggets” have been created by someone, buried in mathematical equations and has no historical context for valuation.

Clearly this raises the question of how many Bitcoins are out there. If it’s unlimited, Bitcoins will have little value. Whoever invented Bitcoin has limited the amount of available coins to 21 million. According to a recent article, 12 million Bitcoins are in circulation and 9 million remain to be “found” or “mined”. How the Bitcoins got there is still not clear and there does not seem to be a mechanism in place to prevent more Bitcoins from being anonymously created.

Wow. The entire Bitcoin currency concept blows my mind. An anonymous person created and launched a currency. Enough people have enough FAITH in this currency that it will retain value, will remain in a limited and finite supply and will continue to be an emerging form of payment. Faith in Bitcoin sounds INSANELY risky to me….but e-commerce giants such as Amazon and eBay have been considering options to accept it as a form of payment. Strange. However, there clearly remains a high level of suspicion of the cryptocurrency in the Banking industry.

Maintaining customer faith in Bitcoin is the number one priority for all Bitcoin providers, exchanges and related companies. Without a tangible asset and historical context for value, Bitcoin will collapse immediately if people lose faith in its legitimacy. Legitimacy will be lost if a number of factors occur: buying/selling illegal products or services, money laundering, currency value manipulation, counterfeit currency. Yes, EVERY currency and monetary system faces these challenges…but the challenges are addressed through a well established banking and regulatory system. Bitcoin, and other cryptocurrencies, does not have this.

Cryptocurrency providers, platforms and related services must push to self regulate to protect their value and legitimacy. The self-regulation must happen FAST for there is a lot of interest and concern building within governments and monetary systems. Establishing standards that are easily adhered to and adopted will be critical. Providers must engage in conversations to define standards and hold each other accountable in very much the same way Truste worked with websites to define consumer privacy and data usage standards.

Screen Shot 2014-07-03 at 4.47.20 PMJumio, a leading provider of identity verification products, is taking the lead in creating such a compliance network. The network is called Bitcoin Identity Security Open Network (BISON) and it’s targeting Bitcoin and Bitcoin related providers to join by agreeing to a set of standards of authenticating the identity of users they are establishing transactional relationships with. This is a great first step in building a compliance standard that is not a stretch for major platforms. The growing incidents of fraud and other criminal activity is the result of anonymous transactions. Requiring user identity authentification will help make the Bitcoin platform much safer.

The big hurdle for Jumio is the willingness of these Bitcoin providers to comply, participate and implement authentification technology.  No easy task.  Jumio is addressing this marketing challenge by building a consumer technology to pull participation by providers. The technology will enable Bitcoin consumers to verify their identity only once and carry these credentials across all Bitcoin platforms. The technology reduces the barrier to use the cryptocurrency and is designed to increase Bitcoin platform registration and trial. Will this consumer benefit increase a large enough lift in a Bitcoin provider’s business? That remains to be seen. But as we all know, the easier a product is to adopt and use, the more likely the consumer is to use it.   Currently eight Bitcoin providers are part of BISON at launch. It will be interesting to track who joins next and if there is enough consumer demand for one-time consumer identity verification. Of course, this will all depend on consumers using multiple Bitcoin platforms.


Fitness apps are great model to help consumers talk about money

Eric DunstanThis past weekend I attended a beach wedding in Santa Cruz, CA. I played the role of husband to the matron of honor and father to the ring bearer. I spent a lot of time with the groom and groomsmen as we waded through the schedule from taking pictures to the bride walking down the sandy aisle. Having never met 90% of these people, most of the idle conversation topics focused on how long we’ve know the groom/bride, where we’re from, the weather, sports and physical fitness.  The wedding party was a very physically fit group and a lot of time was spent discussing work out routines, fitness goals, injuries, metrics for measuruing those goals and what mobile fitness applications were used. One groomsman was a tri-athlete, another a cyclist and several runners…me included. Even though we all did different sports, we all shared a common language around how we set goals and measured success; how many reps/sets, timed distances, time splits, calories burned. Of course, as the day wore on and the drinks flowed, these reported metrics achieved super human status. “I ran a marathon in under two hours, backwards…uphill both ways. In the snow. Waiter, can I have another Grey Goose?” The common interest and shared vocabulary of fitness enabled 8 guys to have a great time at a wedding.

There continues to be a lot of media coverage about our lack luster economy and the fear that many people have about their financial fitness. The fear has grown to a level where many books, websites and personal finance management services have emerged to meet the demand. Clearly, money and sound financial management is top of mind for most people. Unfortunately, talking about ones financial health is a taboo that it is never discussed openly even with close friends or a spouse. I openly discussed my physical health at the wedding last weekend…but it would be WEIRD and AWKWARD if I discussed my financial goals and health with the other groomsman. Why? Isn’t financial health just as important as physical health? We ask others for suggestions on improving our physical fitness.  Why not our financial fitness?

Alexa von Tobel, CEO of LearnVest, addresses the taboo of talking about personal finance in her book, “Financially Fearless“. “We openly talk about everything else, from sex to diets to politics, yet when was the last time you spoke with your friends about money?” I think Alexa is spot on. We as a US society DON’T talk about money and how to manage it well. Most Americans prefer to put their heads in the sand and not think about financial planning for it’s too scary or confusing. One of the biggest reasons we don’t talk about money is that we don’t know how and we don’t have a common vocabulary or framework to pull from.

Eric Dunstan

Flexscore is working to provide that financial framework to enable the conversation. They have developed a methodology that helps consumers assess their financial health through a score and provides support for how to improve. The score measures factors including assets, debt, savings, cost of living, retirement savings…and weights them against a goal. Goals include by what age to retire, buying a vacation home, or sending a kid to college. Flexscore users can compare their goals, expenses, and scores against others within their peer group.

What Flexscore is developing sounds a lot like a fitness app! I am an avid user of the Nike+ iPhone app where I set goals, track fitness activity, achieve milestones…and compare against others. The Nike application also let’s me challenge others to a race or to ask others for coaching advice. Wow, this is a fun way to track fitness activity and engage with friends. Can the same level of engagement be achieved with a financial fitness application? Through the right approach, I think a financial fitness application can be very powerful in helping others discuss money, goals and questions they may have about improving compared to their peers. A scoring system, such as Flexscore, will be a key engagement element that makes measurement informative, fun and something that can be easily discussed with others.

I don’t think it’s a stretch to envision similar personal finance discussions happening with the right measurement tools and applications developed on mobile devices. Going back to the wedding I attended, the wedding party was quick to whip out their phones and show off their fitness data on Nike+ or RunKeeper. The application UI makes the data visually fun to show off and discuss. I can easily envision the same conversation happening around finance applications. The conversation could start with a groomsman saying, “We are really trying to pay down our credit card debt, but it’s not happening fast enough.”  Another groomsman could respond, “I’ve been using this great finance app that scores my financial health. It’s helped me A LOT.”  The conversation goes on from there.

Driving adoption of these finance apps by going direct to consumer will be quite expensive and the marketplace is crowded. However, I think the right strategy for Flexscore is to white label their solution to financial institutions and advisors. A similar platform, Set for Life,  takes another approach by white labeling financial education and money management tools to corporations as a benefits program to get employees to start talking about their money. Flexscore and Set for Life hope to pull through a solid customer base through these white labeled partnerships …while receiving a monthly per user fee. Smart…and this strategy does not require aggressive and expensive direct to consumer acquisition programs. The right clients and partnerships will build a large and highly engaged consumer base for both companies.

As Gen X , Gen Y and Millennials age, the greater the momentum around having financial oriented conversations. The key play for companies like Flexscore or Set For Life is to be the platform that these users engage on to discuss and engage with their finance. Consumers will benefit and so will financial institutions and advisors who are looking for opportunities to engage customers. Consumers will be drawn to the banks and providers who do this best.  Those who don’t engage at this level will watch  their consumer base walk out the door.


Grokker content could be key driver of Blue Apron subscriber growth

Like many of us, my wife and I struggle in keeping a good work/family life balance. We are parents of two young boys and our goal is to provide them with the best opportunities to grow and develop physically, intellectually and spiritually. We’ve learned that parenting is a lot of fun, a more than full time job AND is very rewarding. One of our biggest struggles is getting healthy, flavorful and “kid friendly” food on the table. We make frequent runs to Safeway, Trader Joe’s and to Whole Foods to buy as much fresh food as possible…and end up buying a lot of pre-made food too. Let’s face it, after a LONG day at work, it’s a lot easier to throw in the microwave a Trade Joe’s meat loaf than to whip one up from scratch.

The inspiration to prepare a complete meal does find us a few times a week, however. So we are not a complete “ready made meal” family…at least we’ve got that going for us.  We’ve found that the big challenges in home cooking are…

1. Finding inspiration for great meals

2. Finding recipes that are easy and quick to prepare

3. Shopping for the ingredients

4. Taking the time to prepare the meal (the fun part)

5. Cleaning up (the not fun part)

UGH….any of these challenges is enough to push a family to do ready made food or to buy take-out.

Screen Shot 2014-06-02 at 11.54.28 AMWe have been finding home cooked meal inspiration from a great site called Grokker. Signing up for Grokker is free and they do a great job in how their content is organized. The site provides how-to videos on preparing some great meals taught by professional chefs. When I say “professional” I mean chefs from the higher end restaurants or expert food bloggers…so they know a trick or two. One of our favorites is Whitney Bond who just KILLS it on creative ways to prepare the standard meals. My wife LOVED her sweet potato skin recipe. Or Doc Ward’s smoked ribs are AMAZING.

Grokker clearly addresses the challenges of finding inspiration and finding recipes that are easy to prepare. They also provide the recipe in text form that can be emailed or printed out to then find its way on a shopping list. It would be GREAT if Grokker could make it easy for me to export the list of ingredients into a shopping list on my iPhone. Hint, hint.

Grokker, however, does not help consumers take the pain out of 3 of the biggest challenges of home cooking; shopping, preparation time and clean up. I think if Grokker helped consumers do the shopping they will address A HUGE pain point and the site will attract more consumers eager to be inspired and enabled to cook great food. Hmmm…but how is this done? Grocery delivery is a tough business. Remember WebVan?

Grokker may address the shopping challenge by establishing a strategic partnership with Blue Apron. The combined assets will deliver a powerful consumer experience for both companies and their consumer base. Blue Apron just announced a $50M C-round of funding and is boasting the delivery of 500K meals a month. Wow. Blue Apron positions itself as a better way to cook with fresh ingredients, great recipes delivered to the consumer’s home. For a monthly fee starting at $9.95, Blue Apron provides recipes, ingredients and a home delivery service. The consumers can do the fun part, taking the time to prepare the meal.Screen Shot 2014-06-02 at 12.02.55 PM

I think Blue Apron is missing a key element…the inspiration around food and the community engagement with other foodies.   By partnering with Grokker, Blue Apron receives well-produced content that may help it differentiate itself from competitors such as Plated or PeachDish. Given Blue Apron’s momentum, we all know competitors will be HOT on their apron strings. Amazon is working out the kinks of Amazon Fresh and as we know, they are good at getting e-commerce right.

Clearly, Grokker will gain a great deal from a Blue Apron strategic partnership. They will benefit through the monetization of its well produced cooking content through licensing agreements. Grokker could provide a VALUABLE service to Blue Apron that will generate a handsome revenue stream to fuel expert content development across more categories. Grokker will also provide a key service to their consumer audience – shopping and delivery of recipe ingredients. As a Grokker user, I see this as a great service!

Some may ask why Blue Apron would not just create the content themselves given their large capitalization. Clearly they have the money.   Aah…creating the right, well-produced content is easier said than done, young Jedi. This is Grokker’s core competency. Another obvious question is why Blue Apron does not just buy Grokker…after all Grokker’s valuation at the moment is far less than Blue Apron’s at $500M. From what I can see the Grokker team is focused on building an expert video network including content beyond food, including yoga and health/fitness. In short, Grokker may not be open to Blue Apron’s marriage proposal…which is smart. Grokker will become a real hot number and potential suitors will be coming out of the woodwork.

The big key in making a Blue Apron/Grokker partnership work is ease of integration. The Blue Apron leadership team is under A LOT of pressure to grow subscribers and revenue. Grokker content can help grow subscribers by providing a lot of great content, recipes and chef personalities. If this content can be easily integrated on Blue Apron with minimal front-end engineering support, it’s not a stretch to envision this partnership.

I’m hungry.


eBay cyber attack highlights value of card on/off tools

eBayEbay is yet another giant consumer brand that has fallen victim to a cyber attack. Like many of us, I raced to change my password when I heard the news break early Wednesday morning. Of course the news media and many eBay users assumed the worst had happened and that personal and financial information had been breached. Fortunately, the attack was limited to a corporate network and only a small amount of employee login credentials were breached. EBay’s PayPal business unit did not show evidence of user personal or financial information being exposed. Few.

Given the frequency of these high profile breaches, it seems like only a matter of time before hackers are able to break into the networks of the most trusted consumer brands and financial institutions. Target experienced a massive breach late last year that many consumers are still dealing with today.   High-end retailer Neiman Marcus experienced a breach as well. Larry Ponemon, chairman and founder of the Ponemon Institute, which specializes in data-security issues, said “It shows that even the best of Internet sites are vulnerable to cyber attacks … you can’t stop this tidal wave.”

Yikes! What are consumers to do?! Even the perceived most secure websites, businesses and financial institutions are vulnerable to cyber attack. I think the best form of protection is to empower consumers to control when, how and where their credit or debit card data is used. If consumers can limit the use of, “turn off” or block the use of a card, they are empowered to protect themselves from any resulting damages from these cyber attacks.

Ondot Systems provides one of the most compelling solutions to help consumers take control of their payment cards.  The Ondot solution lets consumers…

  • Turn a credit card on or off
  • Limit the use of a card to a specific retailer or spend category
  • Limit card use to an area near them or to a specific geographic region

Ondot SolutionsThe eBay cyber attack highlights the consumer value of Ondot solution    Imagine that you were a victim of a data breach and that your credit card information may have been sold on the black market. Sadly, this is the case for millions of US consumers. The Ondot solution empowers you to prevent any fraudulent transactions should a fraudster purchase your data and attempt to buy things on or offline. For example, upon hearing about the breach you could easily turn off the card immediately giving you extra time to determine if it’s necessary to cancel the card. Or, if you limit card use by geo proximity to you, use of the card will be denied to any cyber criminal across the world attempting to purchase items. You are empowered to protect yourself from fraudulent payments BEFORE they even happen. That’s cool.

Ondot Systems does not provide a direct to consumer solution. They are actively pursuing relationships with the major payment processors and financial institutions to white label the technology. I’m wondering though if this technology is relevant enough that consumers could actually ask their bank card providers for it….or be willing to switch to a card provider who has this technology deployed already. The Ondot solution could prove to be a strong differentiator that may attract many new customers to a bank’s credit card offering.   With the increase in data breaches, I’m hoping my bank will provide this functionality soon. If not, I am open to learning more about who does offer this technology.

Ondot has the wind at its back now. However, this technology is not new and competitors have built similar solutions. From what I understand from my patent attorney friends, this technology is not particularly defensible for there are many ways to skin that technology cat.  Meow.  Ondot must build strategic partnerships with the largest payment processors first to grow market share…and do it quickly.  These processors will pave the way to deploying to small and mid tier banks.  Ondot’s big hurdle will be in how easily the solution is deployed at the bank.  As we know, these smaller banks get heartburn if a solution integration requires a big internal commitment.  However, it appears they have addressed this hurdle with seamless integration into the universally accepted payment standard and with deployment support. Once deployed, Ondot’s next challenge will be in how well they engage these banks in co-marketing the solution to the consumer.  Many mid and lower tier banks run lean on marketing so the key here will be how to take advantage of current marketing channels to drive adoption.  However, I have a feeling consumer word of mouth may be the most effective channel.

Ondot is a formidable competitor and is well positioned to be the market leader.  Now it’s about how well they execute.


Flexscore makes it easy for consumers to evaluate financial health

Earlier this month I got an email from Credit Sesame enticing me to return to their site and see how my credit score has changed. I created an account over three years ago when my wife and I were in the hunt to buy a home and needed a sense of our credit score to get pre-qualified for the loan. However, after we got approved, we’ve had little need to check our score again…until I got the email from Credit Sesame with the subject line “see how your credit score has changed.” The competitive side of me was immediately activated and I logged into Credit Sesame. Fortunately, my score went up….however I do not know why. Beyond the home purchase, my credit activity has been the same as it ever was (Talking Heads anyone?). If anything, the cash component of our financial health has become softer AFTER the purchase. Credit scores don’t measure financial health…only credit worthiness…using a process NO ONE UNDERSTANDS! Beyond affecting the ability to borrow, the credit score has a limited use.

We are all engrained in the United States to care about our credit score. We all know our own score (roughly) and understand the influence it has for us to borrow money. However, the score fails to measure other important factors that influence how much money we can borrow: cash on hand, savings accounts, equities, retirement funds, etc. These are all factors that define our financial health. However, there is no similar scoring tool to help us measure our financial health. I think a financial health score would be much more relevant for consumers as it is a data point that helps discern where they stand in relation to life’s big financial pressures including qualifying for a loan or understanding how much money they need to retire.

Screen Shot 2014-05-21 at 1.51.15 PMFlexscore is a innovative FinTech company that is trying to do just that; provide a service that gives consumers insight into their financial health through one score. Their consumer site is now live and they are touting a base of 30K users.Aside from the challenges, Flexscore has even greater opportunities ahead.

The potential big win for Flexscore is their unique ability to build a technology that produces a “score” relevant for consumers, financial planners AND financial institutions. Flexscore recently presented a new solution at FinovateSpring that helps financial planners provide this score to their clients. This is interesting for it gives the advisor and client a unit of measure that they can BOTH understand.Yes, it may be a challenge to get enough advisors to adopt the Flexscore and trust the methodology behind it. I think there is opportunity here for Flexscore to gain traction if financial advisors at banks and lending institutions adopt the scoring.   By engaging customers in conversations about their financial health, banks are able to build deeper customer relationships and their pool of potential clients to lend to. Remember banks make their money off mortgage lending. This deeper consumer relationship will also ease the torrid lending process for the bank will have record of the consumers’ financial health and documents on file. Banks will be lending to a known and assessed borrower….insuring a much faster approval process. A faster approval process means a happier customer!

Screen Shot 2014-05-21 at 1.48.23 PMI’m envisioning a financial advisor saying, “Mr. Dunstan, if you achieve a Flexscore of 780, you will be qualified for a great mortgage or refi rate of X%. Let’s see what we can do to get there.” Boom. The reason for having a Flexscore is directly relevant for me as a consumer….and I’m now engaged in a relevant conversation with my banker. This conversation becomes a collaboration in which the bank is “selling” me another loan. Another conversation could focus on my retirement planning with my bank’s financial advisor. “Mr. Dunstan, to retire at 65, you need a Flexscore of 950. You are a ways off from 780. Let’s see how we can get you to your goals.” The Flexscore is now the centerpiece of all future financial planning discussions and compass to the banking products needed to achieve the goals.

By enabling banks to make more money off their customers, Flexscore can quickly drive adoption of its more complete financial health scoring method. Banks will pull consumers through the scoring process for it’s relevant for conversations already happening. Consumers are well primed to understand the relevance of this score and may even take action to improve with the right incentives. Hmmm….I can feel another blog post brewing about gamification of this process. However, if Flexscore decides to push this score directly through the consumer channel, building adoption and relevance may prove more costly. As we know, driving consumer awareness and adoption in this noisy world will be expensive for them. Additionally, convincing a typically very tepid consumer to care about their financial health “score” will be challenging too. Remember, consumer adoption rates for personal finance management solutions are typically very low (sub 5%)…which means getting consumers to engage with their money is REALLY HARD.

Keep an eye on Flexscore. I think with the right partners and clients Flexscore could redefine how we as consumers evaluate, measure, improve and discuss our financial health…and with so few Americans adequately prepared to retire, these conversations need to be had earlier in life.


How can a remote control for credit cards create value for consumers and banks?

Last week I attended FinovateSpring in San Jose. I was excited to see the latest innovations around mobile payment technology from companies including Loop, Quisk, WePay and Red Giant. However, I was most intrigued by what Ondot presented and the value the technology provides to consumers and to financial institutions. Their technology was so well received last week that Ondot won a Best of Show award.

Screen Shot 2014-05-09 at 10.48.15 AMYes, there has been a lot of activity within the digital wallet space to improve card security or reduce the number of cards one needs to carry. Coin, for example, enables users to consolidate all their credit and debit cards on to one “smart” credit card. Think Swiss Army Knife…but just for your cards. The user selects which card to use by activating it on the Coin device…with the other cards remaining turned off. FinovateSpring presenter, Red Giant hopes to replace all the cards in consumer’s wallet with a “smart” card that can be turned on to make purchases…to then be turned off when not in use or if it’s not in the close proximity of the userI think what Ondot presented takes the card management and security technology features and benefits one step further in meeting the needs of the consumer AND the financial institutions. Ondot launched its Mobile Card Services…or putting it simply, it launched a technology that enables a user to remotely turn on or off a payment card from a mobile device.   There is no need to carry around another device or card. Ondot is controlled by the one item weall carry with us….our phones. The implications of this technology are HUGE for consumers and for banks.

Consumers now have the opportunity to control when, where and how a debit or credit card is used. Thinking this through a bit, this technology in effect helps prevent fraud or spending abuse before it even has a chance to happen. It puts the cardholder in total control of all cards in the purse or wallet! That is GREAT!!!!!

For example, let’s say your wallet or purse (or Coin device!) falls out of your hands and all your credit cards are now in control of a nefarious individual. The Ondot solution can be used to sense that your card is no where near you and turns off the cards before the potential criminal is able to run to Best Buy and buy a TV. Or, let’s say you give a credit card to a son or daughter attending college and you want to limit the type of spending to just books and school supplies…and not to spending at bars and restaurants. If your child tries to charge a $100 round of drinks on Friday night the card will be denied for payment. Sigh…hopefully your child is good at washing glasses to pay the bar tab!

Ondot benefits for banks are equally as exciting. For example, offering this remote control feature will be a big point of differentiation for card issuing banks. I can’t think of any bank within the SF Bay Area that provides this feature….without having to actually cancel the card. Secondly, the technology helps consumers reduce exposure to fraud…which in turn helps banks and card issuers reduce charge backs. Lastly, if integrated correctly on the bank’s website or mobile app, the solution creates another touch point with consumers who regularly manage and check their cards. There will be A LOT of opportunities for the card issuing bank to learn about spending patterns and to cross sell these users to other banking products. This feature could get customers to return daily to the branded mobile app to manage their credit cards.

The big challenge for Ondot will be how easily will these features be integrated within a financial institution’s current online and mobile banking platforms. Ondot will no doubt be exploring strategic partnerships with the platform providers to help springboard distribution and adoption. The Ondot product team will also be looking into how the solution can be integrated through APIs…which will be a key requirement for the mid and lower tier financial institutions.

Ondot will be one to watch!


FinTech fun had by all at FinovateSpring

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I had a great time last week at FinovateSpring live blogging for Money Summit.   There were so many great technology demos presented and a lot of great networking was had by all. This was my fifth Finovate event and it was great to see many familiar denizens of FinTech and to meet many new innovators. According to the Finovate team, this event was the most attended ever with over 1,200 people fitting into the City Nation Civic in San Jose.  Hopefully my co-blogger, Brad Leimer and I were able to provide insightful comments and perspective to what was presented during those two days. Please feel free to Tweet questions to Brad (@leimer) or to me (@ericdunstan) and we will do our best to respond as quickly as possible.

Congratulations to the FinovateSpring Best of Show winners

  • EyeVerify
  • Loop
  • Interactions
  • Motif Investing
  • Ondot
  • PrivatBank
  • SaveUp

Personally, I was most excited by what was presented in the mobile payments, virtual CRM, and digital banking technology verticals. Look for future posts for my perspective on presenting companies in each vertical.FinovatePic

As far as the Best of Show winners go, I was very impressed by what EyeVerify, Loop, Ondot and PrivatBank presented.

I will continue to contribute to the Money Summit blog. I will post links to content I produce. Or, better yet, add Money Summit to your “FinTech” news feed on Feedly or Flipboard.

I hope everyone had a safe and easy trip home and is having a productive week.


It’s time to get things started at the Finovate show!

I have a strong background in theater arts that has always influenced how I deliver presentations or evaluate events that I attend. Some presentations and events have flash and sizzle (think CES)…while others are snooze festivals sponsored by Sleep Train. I can’t help think how a CEO’s presentation could be more impactful if someone played the “I am Mighty Mouse and I here to save the day!” theme before he or she walked on stage to deliver the new turn around strategy. He he.

Mostly these musings are simple forms of cerebral entertainment to keep me awake during long meetings. Face it, we all dread going to long presentations that we tune out after the first hour as we regularly login to check email on our laptops. It’s a delicate balance between getting the message across and creating a level of entertainment that engages the audience to receive the message.

The show gets started tomorrow for FinovateSpring in San Jose. Finovate is one of (if not THE) leading FinTech innovation shows in North America and Europe. Like many show attendees, I’ve been to several Finovate shows and love the excitement and energy the format creates and seeing innovators get up there and sell sell sell their innovation. Obviously there is a great deal of networking that goes on their too as innovators seek the right strategic partner to grow the business, technology and customer audience.

I wonder what would happen if the Finovate team started the next event in a slightly different manner. Instead of the standard welcoming remarks and sponsor thank yous, could Finovate be opened with a musical number to energize the crowd and alleviate the tension of the presenters?

I always enjoyed the opening song (or “number”) of The Muppet Show that introduced their host and kicked off a series of great skits. Could a similar song and musical number be done for Finovate? Would Statler and Waldorf like it? Would the audience boo and hisssss?  I think it’s worth a shot.  Afterall, we are together for two days and have a lot of ground to cover!  Let’s have some fun!

The Finovate Show Theme Song

(Drum Roll)

It’s the FinovateSpring Show with our Very Special Host, Eric Mattson

It’s time to play the music

It’s time to light the lights

It’s time to meet the FinTech Innovators on the Finovate Show tonight.

It’s time to put on makeup

It’s time to dress up right

It’s time to raise the curtain on the Finovate Show tonight.

Why do we always come here?

I guess we’ll never know

It’s like a kind of torture

To have to watch the show

And now let’s get things started

Why don’t you get things started?

It’s time to get things started

On the most sensational innovational inspirational Finovational

This is what we call the Finovate Show!

I am very excited to attend the event tomorrow as a guest blogger for the newly launched Money SScreen Shot 2014-04-28 at 1.55.33 PMummit blog produced by MoneyDesktop. I will be providing commentary with fellow Fintechy, Bradley Leimer throughout the two day event. In keeping with the Muppets theme, Brad and I will be a MUCH kinder and more professional version of Statler and Waldorf of sorts.  We are looking forward to a great event!


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